There has been a lot going on for the last year in the US economy, housing market and in the stock exchange, Apple and the trade wars globally. Among all this, the future of the US housing market in 2019 is a great concern for the entire world and especially the citizens.
“Despite steady climbing for the past two years, mortgage rates remain lower than they were during most of the recession and below average for the type of strong economic growth we’ve been experiencing. That will change in 2019, as the 30-year, fixed rate mortgage reaches 5.8% — territory not seen since the dark days of 2008 when rates were racing downward in response to the housing crisis.” — Aaron Terrazas, director of economic research for Zillow
That said, there are a lot of sectors globally which grew at a faster rate in 2018 but the US stock market remained cold. The only plus point was that it didn’t crack.
But if the US housing market went down then all other economic growth graph will decrease at a very fast rate. The whole global market will soon be crumbling if this economic growth sector is regarded.
“Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019. Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.” — Danielle Hale, chief economist for Realtor.com
Source – Realtor.com
It’s no wonder that Millennials are the most home buyers in 2019 as per predictions and the way it looks like.
“As we look toward 2019, we are anticipating home sales to decline around 2%. We’re expecting it to be another slightly slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth.” — Ruben Gonzalez, chief economist at Keller Williams
Source – Realtor.com
“Right now, for 2019, we believe home price appreciation will likely slow to near 3%. This is based on the assumption that the recent pattern of increasing inventory levels will be sustained in the upcoming year.”— Gonzalez
Keeping in mind all the points the 2019 will be a promising year for the growth and sustainability of US housing market. Following are the reasons:
There are many opportunity zones which were created in the 2017 act and will, therefore, implement this year. Governor, when placed in underdeveloped areas, will boost and allow the growth of the US housing market this year.
Moreover, the pundits have also given many insights on the growth of this market this year. Capital gains should be increased if the investor has to take full advantage until 2026.
Source – ATTOM DATA SOLUTIONS
Mortgage Interest changes:
Interest on mortgage deduction was covered by the tax law in 2017.But many American families still don’t know about this fact. They will prepare their taxes according to the interest rate on mortgage and will know when their tax files will be returned back. So this will have a huge impact on the US housing market.
“The housing market in 2019 will be characterized by continued rising mortgage rates and surging millennial demand. Rising rates, by making housing less affordable, will likely deter certain potential homebuyers from the market. On the other hand, the largest cohort of millennials will be turning 29 next year, entering peak household formation and home-buying age, and contributing to the increase in first-time buyer demand.” — Odeta Kushi, senior economist for First American
Interest rates: US
This fixed interest rate usually increases at the closing of the year over 1-2 percent. But for this 2018 year it has dropped to a very astonishing figure.So now American citizens can buy the housing property very easily. They will be affordable for all of them.
“In the majority of markets, the number of homes being put on the market or newly constructed has increased slightly, while the pace of sales has slowed slightly, which has helped stop the inventory decline. But the inventory increases or slowing price increases necessary for a more widespread sales gain are not forecasted to happen in 2019. While the situation is not getting worse for buyers, it’s also not improving notably in the majority of markets.” — Hale
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- Reduction in prices:
Consumer capacity to buy new homes is great in this year. As for the past 10 years housing prices have reached their saturation level. They cannot increase further.
Therefore, when no one buys property then there will be a sharp decrease in the price of houses. So everyone can then afford that rate and will buy. So 2019 will prove to be a promising year in the US housing market.
All in all, housing in the US is all set for a slow-down this year, but as peers said that’s not actually a bad thing.
“The medium and long-term prospects for housing are good because demographics are going to continue to support demand,” “With a slower price appreciation, incomes have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”
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